Exporting and Trading info

PROBLEMS OF INTERNATIONAL DATA Reasons for Inaccuracies For the most part, incomplete or inaccurate published data result from the inability of many governments to collect the needed details. Poor countries may have such limited resources that other projects necessarily receive priority in the national budget. Why collect precise figures on the literacy rate, governments of poor countries reason, when the same outlay may be used to build schools to improve that rate? Education affects the competence of governmental officials to maintain and analyze accurate records. Economic factors likewise hamper the retrieval and analysis of records, since hand calculations may be used extensively instead of electronic data-processing systems. The result may be information that is years old before it is made public. Finally, cultural factors affect responses. Mistrust of how the data will be used may lead respondents to give erroneous information—particularly if questions probe financial details....

LOOKING TO THE FUTURE   As overseas sales and profits as a percentage of sales and profits ~ become more important, there will likely be a decline in the au- tonomous power of subsidiary managers. Their power base will likely erode as greater centralized control of product, marketing, and financial planning is necessary to bring about needed synergy among firms' operating units worldwide. This centralizing tendency, within the framework of strong, capable local management, assumes (1) that trade barriers continue to decline; (2) that it becomes economically feasible, to an ever greater degree, to organize the exchange of products, components, and factors of production on a country-by-country basis; and (3) that companies will increasingly need to respond to global competitors and more-homogeneous consumer wants. Although control within MNEs will continue to be problematic, a growing challenge will be the control of relationships with other companies as MNEs develop more allianc...

CONTROL IN SPECIAL SITUATIONS Acquisitions As was noted in the Nestle case, a policy of expansion through acquisition may create some specific control problems. In the Nestle situation, some of the U.S. acquisitions resulted in overlapping geographic responsibilities as well as new lines of business with which corporate management had no experience. Another type of problem is that the existing management in the acquired firm is probably accustomed to a great deal of autonomy. Attempts to centralize certain decision-making procedures or to change operating methods may result in distrust, apprehension, and reluctance to change. This is especially true when a firm acquires another firm in a foreign country. Resistance may come not only from the personnel, but also from governmental authorities. Authorities may use a variety of discretionary means to ensure that decision making remains vested within the country. Moving from National to Global Strategies It is difficult to remove contr...

Need for Reports Headquarters needs timely reports from all operating units of an international finn so that management can allocate resources properly, correct plans, and reward personnel. First, the decisions on the use of capital, personnel, and technology are almost continuous; consequently, reports must be frequent and must show recent situations so that these resources are put to best use. Second, plans need to be updated in order to be realistic and to assure that there is a high probability of meeting desired objectives. Feedback on both results and conditions that might affect results are essential so that corrective action, whether in the form of new strategies to meet objectives or in the form of altered objectives, may be undertaken. Finally, reports are needed in order to evaluate the performance of personnel in the various operating units of the company. Not only will comparison of performance aid in determining who will receive the rewards of monetary compensation and...

CORPORATE CULTURE Any corporation has certain common values its employees share. These constitute the corporate culture and form a control mechanism that is implicit and that helps enforce the explicit bureaucratic control mechanisms that the firm has in place.24 International firms have more difficulty relying on the corporate culture for control because managers from different countries may have different norms pertaining to the management of operations and little or no exposure to the values and attitudes prevalent at corporate headquarters. Nevertheless, many firms seek to promote a worldwide corporate culture by bringing managers from different countries into closer contact with each other. Frequent transfers of managers among foreign operations develops increased knowledge of and commitment to a common set of values and objectives so that fewer procedures, less hierarchical communication, and less surveillance are needed.25 For example, the 3M Company not only brought managers ...

BUSINESS RESEARCH usiness research is undertaken to reduce uncertainties in the decision pro- cesS/t0 expand or narrow the alternatives under consideration, and to assess the merits of existing programs. The reduction of uncertainty would include attempts to answer such questions as: Is there a market for the product? Can qualified personnel be hired? Will the economic and political climate allow for a reasonable certainty of operations? Alternatives may be expanding by asking, Where are possible new sources of funds or sales? or narrowed by ascertaining, Where among the alternatives would operating costs be lowest? Evaluation and control are improved by assessing present and past performance: Is the distributor servicing sufficient accounts? What is our market share? Clearly, there is a myriad of details that, if ascertained, would be useful in meeting the firm's objectives. How Much Research? A company can seldom if ever gain all of the information its managers would like- Th...

PLANNING Throughout this text we have emphasized the firm's need to adapt its unique resources and objectives to the different and changing foreign situations. This is the essence of planning. Without planning, it is only by luck that a company picks the best order and method of expansion by country. Without planning, it is again by chance that a company sets policies and practices in a given locale that result in the desired performance. Since planning has been both implicitly and explicitly discussed already, this section presents merely an overview of the process. The Planning Loop Figure 17.2 indicates that planning must involve the meshing of objectives with the internal and external environment. The details in each planning section include items discussed in the environmental and operational sections of this text. Note that the first step (A) is the development of a long-term strategic intent, an objective that will hold the organization together over a long period of tim...

ORGANIZATIONAL STRUCTURE As a firm develops international business activities, its corporate structure must adapt to the changing environment in order to accommodate foreign operations effectively. The organizational structure that emerges will depend on many factors, including the location and type of foreign facilities, the impact of international operations on total corporate performance, the nature of assets employed in pursuit of business abroad, and the time horizons for achieving international and total corporate goals. Firms must establish legal and organizational structures at home and abroad to meet company objectives. Within each foreign country these arrangements may differ because of the unique nature of activities and environmental requirements. Layered above the country organizations are additional structures that coordinate activities in more than one country. The form, method, and location of operational units at home and abroad will affect taxes, expenses, and cont...

LOCATION OF DECISION MAKING Any firm must determine where decisions will be made on such diverse questions as product policy, the acquisition of funds, and placement of liquid assets. The higher the level within the organization decisions are made, the more they are considered to be centralized; the lower the level, the more they are decentralized. The centralization-decentralization question may be addressed either from the standpoint of the company as a whole or from some part of it, such as within a particular subsidiary operation. This discussion will not cover the latter; rather, it will highlight the relationship of the country-level operations to other parts of the international company, such as headquarters, regional offices, or other subsidiaries. For purposes of this discussion, decisions made at the foreign subsidiary level are considered to be decentralized, whereas decisions made above the foreign subsidiary level are considered centralized. There are opposing pressures ...